Vietnam business hub eyes the future
HO CHI MINH CITY - Pessimists predicting the end of the Asian ``miracle''should avoid Vietnam's Ho Chi Minh City.
Despite the growing impact from the regional financial
crisis on the former Saigon, Vietnam's hub for business,
style and sleaze still oozes a vibrancy that officials believe
will keep the city's economic engine humming.
Residents wield a can-do attitude that highlights how bad
things once were in this southern city of five million
people.
``Fifteen years ago if I dropped a grain of rice off my
plate I'd pick it up off the ground,'' says Thanh Tung, a
musician and restaurant owner.
Then, the city suffered from the dead hand of socialist
central planning and a disastrous attempt to collectivise
southern Vietnam's agriculture after communist forces
defeated the U.S.-backed Saigon regime in 1975.
After finally emerging from decades of war, famine and
bankruptcy stalked Ho Chi Minh City.
Now the place is ablaze with neon and the focus for
investment, tourism and Vietnam's lucrative commodities
trade following economic reforms adopted in the late
1980s.
Even though foreign investment in the metropolis has
plunged this year, the city's economic growth hit 9.1
percent in the first half of 1998 compared with the same
period last year -- a figure most cities in the world would
die for.
Vietnam's commercial capital also accounts for a
whopping 30 percent of the country's output, underlining
its strategic importance to the communist leadership in
Hanoi.
Per capita income stands at $1,000, way above Vietnam's
national average of just over $300. Local officials target
per capita income of $1,500 in 2000 and more than $4,000
in 2010.
HO CHI MINH CITY BLESSED WITH ADVANTAGES
Le Thanh Hai, vice chairman of the Ho Chi Minh City
People's Committee, or local government, acknowledges
the negative impact from falling foreign investment and
export growth.
Local media has also reported extensively on foreign
firms laying off workers in the city.
But there was room for optimism, Hai told Reuters.
He said industrial growth was solid while capital
investment in non-state enterprises was booming.
Asked about the city's exports, where overall growth fell
0.6 pct in the first half of the year compared with the
same period in 1997, Hai said once Hanoi-controlled
enterprises were stripped from the equation, shipments
were sailing along.
Exports in the city's home-grown industrial sector grew by
18 percent in the first half of 1998, while shipments from
foreign-invested firms rose more than 45 percent, Hai
said.
``We believe this city can overcome its difficulties and
maintain good economic growth,'' he said.
Economists also point to a ``parallel'' economy that
revolves around an informal financial sector which helps
grease the city's wheels. Because Vietnam has come off
such a low base in the past 10 years, there was also
plenty of momentum left in the city despite the fall off in
foreign investment, they added.
And there is the human factor.
Southerners, accustomed to a free-wheeling economy
before and during the Vietnam War, regard themselves as
smarter at business than northerners, who have been
steeped in a culture of state ownership.
Nevertheless, sustained growth depends on how long Asia
takes to emerge from its misery and whether Vietnam
can extract the feared bureaucracy from the hair of
frazzled foreign investors and mobilise domestic
resources.
CITY SKYLINE TAKES SHAPE
The city is also marking its 300th anniversary this year.
While Vietnam traces its history back 2,000 years, Ho Chi
Minh City was part of the Kingdom of Champa until 1698,
when ethnic Vietnamese laid claim to what was just an
outpost on the Saigon River, some 45 nautical miles from
the ocean.
Ho Chi Minh City today sprawls out from large
boulevards. Glass-encased buildings reach for the sky,
offering stunning views of the country's largest port,
which hugs a bend in the Saigon River as it flows through
the city.
This urban development has attracted property companies
from around the world, although business has slowed amid
the Asian economic crisis.
Richard Whybrow, country manager at property
consultants Jones Lang Wootton, said Asia's woes held a
silver lining for the city because it had halted many
speculative projects.
``There was a lot of speculation in the gaining of licenses
for property development and if these had gone ahead
there would have been massive problems. If the Asian
crisis hadn't hit there would have been a frightening
amount of oversupply,'' he said.
Whybrow said there was 50 percent vacancy across the
market in occupancy of office buildings for Ho Chi Minh
City and it could be at least 12 months before the rate fell
significantly.
Some 10 office block projects were on hold, he added.
One project that has gone ahead is a $650 million
Taiwanese development comprising an export processing
zone, a 350-megawatt power station, office blocks,
residential units and four schools.
Located 20 minutes from the city centre, the project will
eventually create jobs for 500,000 people, said Lawrence
Ting, chairman of Taiwan's Central Trading &
Development Corporation, the project's investor.
Ting said there had been plenty of interest in the
development, which took shape in 1993 and should be
completed in 10 years. The venture offered a one-stop
service for businesses and exporters, Ting added.
He said nearly $500 million had been spent so far on the
project, with the export processing zone already breaking
even. The whole project should break even in two years,
he added.
By Dean Yates - Reuters - September 07, 1998.
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